E-Procurement Marketplace Can Be A Promising Business Vertical

Digitization approaches various aspects of business, including procurement systems or procurement. Now the development of technology has made it possible for related ecosystem chains to procure online or digitally. The general term is e-procurement. 

A number decision maker in the company may think it will be difficult for the organization to learn how to e-procurement work. However, not a few companies have also switched to this system because of a number of advantages, such as time efficiency to high transparency.

In Indonesia, the use of e-procurement not common, considering that not many companies have aware to this concept. However, a number of digital companies are trying to introduce this system with an easy-to-adoption concept.

Corporate obsolescence issues and B2B adjustments

In recent years, a number of startups in Indonesia have begun to look at e-procurement as a promising business vertical. Service e-procurement considered feasible because the B2B business model is easily scalable.

To facilitate its penetration in the market, this startup combines the concept of veterans in the digital industry, namely: e-commerce/marketplaces with B2B services. Globally, this kind of service has won success from big players, such as Amazon Business and Alibaba Business.

According to our radar, a number of Indonesian startups are getting into business marketplace B2B includes Mbiz, Bizzy, Bhinneka, Ralali, Bukalapak, and ProcurA.

Mbiz, Bizzy, and Ralali from the start made marketplace B2B as its main business. Nonetheless, since mid-2019, Bizzy started pivot from the line of business e-procurement marketplace in order to strengthen the business ecosystem from upstream to downstream and focus on B2B only.

Meanwhile, Bhinneka and Bukalapak have been marketplace B2C and C2C are starting to develop new verticals to B2B. Unlike the others, ProcurA does not have marketplace and focus on developing solutions e-procurement for the company.

Business marketplace B2B is considered to be the right concept to solve various old problems that occur in corporations, namely low efficiency and transparency.

In an interview with DailySocial, CEO of Mbiz Rizal Paramarta said that low efficiency and transparency can lead to new problems, namely the process procurement long-winded and too administrative. He gave an example of how government agencies need months to procure laptops.

This lengthy process, said Rizal, actually stems from a long series of activities, ranging from price comparisons, open and closed comparisons, joint opening of offer letters, not to mention price announcements.

"We saw problem This transparency and lengthy process can be solved by digital solutions because all activities are recorded. So there is no data manipulation space. Indeed, this long-winded process is actually related to administrative matters. Well, this is suitable to be automated with digital," he explained.

Temporary Director OpenProcurement Hita Supranjaya said that e-commerce, digital payments and logistics innovations have significantly changed consumption behavior patterns. Well, this change finally pushed for adjustments in terms of increasing competitiveness and increasing speed in serving customer needs.

"On the one hand, the challenge for B2B companies here in facing global market competition is that it requires technology development that takes a long time and costs a lot," he said some time ago.

The new face of the procurement industry

In general, e-procurement covers a wide range of activities, such as e-tender, e-auctions, vendor management, to contract management. Across a number of business models that combine marketplace and e-procurement, the ordering flow is not the same as the service E-commerce in general.

As an illustration, the Mbiz service has a number of related features, such as tender module and contract management integrated into the system financial accounting. That is, there is still a process procurement until the negotiations continue to the next stage purchase order.

Marketplace B2B offers a lot of things made easy with the support of technology. By "moving" procurement activities to the digital space, marketplace B2B makes it easy for related ecosystems to meet face-to-face seamless pattern, ranging from corporate or government clients, principals, vendors, and logistics.

Other than that, marketplace B2B is considered to be the right solution for carrying out procurement activities because it is process efficient and more transparent. Solution e-procurement cannot provide room for manipulation because the whole process is digital based. This can avoid opportunities for corruption.

Not only that, efficiency and transparency will encourage other positive effects, such as increasing productivity by diverting human resources to other jobs, accelerating transaction processes, and eliminating activities. paper work layers.

Ecosystem is key

By business model, marketplace for e-procurement considered promising because generally B2B businesses can guarantee measurable revenue and profit growth. However, its success depends on how the startup prepares a strategy.

One of the strategies used by Mbiz is collaborate with Investree as an avenue for access to digital payments and loans. Investree's entry into the ecosystem circle marketplace Mbiz can attract potential new service users without burning money.

According to Rizal, startups don't have to bother spending money to acquire one customer. Unlike the retail segment, nature B2B business does not depend on strong competition for discounts or price promotions, but on the rationality of needs.

However, he considers it difficult to push awareness market for services marketplace B2B and e-procurement. He considers that the corporate sector is not yet aware of the importance of digitizing business processes. This could mean that there is no full commitment from the C-Levels yet.

"Awareness low so adoption is also low. Moreover, our competitors have stopped operating. The more players here, the better. It's an obvious business practice. After all, it is irrelevant to upgrade awareness with a money-burning strategy. Our target market is rational and awareness this must becreate in a way that sensitive and smart," he said.

One of the keys to the success of this business is the strengthening of the ecosystem chain. Same thing with concept marketplace B2C that we've seen so far. "If only providing solutions e-procurement or module only without marketplace, there is no ecosystem," added Rizal.

The CEO of Bhinneka Hendrik Tio said the same thing. According to him, the Indonesian market still needs market education to marketplace B2B. Therefore, building an ecosystem according to the character and target market is important to enable it beg and demands. Meanwhile, Bhinneka has now serving more than 20.000 corporations.

"This business has different characteristics from marketplace normal, where B2B has a level stickiness better and basketball size bigger shopping. Say a platform that understands them better, a more comprehensive ecosystem to value, as fulfilment and aftersales definitely make more customers sticky," he said.

Opportunities for the digital economy

On one occasion, the Institute For Development of Economics and Finance (INDEF) revealed that the solution e-procurement can be one way to increase the growth of the digital economy. The trick is to target the government and corporate sectors in Indonesia, which are still low in adopting digital solutions.

According to INDEF economist Bhima Yudhistira Adinegara, this business opportunity can encourage the realization of government spending to be absorbed more quickly without endless administrative activities. Likewise, the industrial sector has not considered the importance of digital adoption.

"From the findings of INDEF and Google, the biggest effect can be felt in the manufacturing sector. Opportunity needs e-procurement because it is supported by a transparent and efficient system. This benefit can actually stimulate the manufacturing sector to want to use e-procurement," said Bhima some time ago.

The common thread of the solution e-procurement is a cost that can get cheaper as more governments or businesses use it. The logistics sector is one example of a sector with high operational costs that can be streamlined.